Understanding Your Coverage
Insurance is the primary financial safety net after a disaster, yet most policyholders do not fully understand their coverage until they need it. Key concepts: dwelling coverage (structure repair/replacement), personal property coverage (contents), additional living expenses (ALE — hotel, meals while displaced), and liability coverage. The replacement cost versus actual cash value distinction is critical: replacement cost pays to rebuild with similar materials at current prices; actual cash value deducts depreciation, meaning a 15-year-old roof might yield only 30% of replacement cost. Deductibles for named storms (hurricanes) or earthquakes are often percentage-based — a 2% hurricane deductible on a $400,000 home means $8,000 out of pocket before insurance pays anything.